NEW YORK (MarketWatch) -- Treasurys rose on Friday, sending yields lower, as stocks came under renewed pressure from the ailing financial sector, while a surge in crude-oil prices to a new record fueled concerns about the economy.

The benchmark 10-year Treasury bond gained 0.8% to 101.03, yielding ($TNX) 3.740%. The 2-year note rose 0.02% to 99.27, yielding 2.198%, while the 30-year bond advanced 0.2% to 97.31, yielding ($TYX) 4.498%.

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"Treasuries extended higher overnight on safe-haven buying amid renewed credit concerns after AIG," analysts at Action Economics said in a note. "That, alongside oil at $125 per barrel, weighed heavily on equities globally."

Crude-oil prices reached another record of $126.25 a barrel as the dollar weakened and amid continued supply disruptions. See Futures Movers.

"Rising oil prices appear to be supporting Treasuries, suggesting the market is [correctly] reading the increase as an effective tax that will wipe out the temporary boost from the rebate checks and slow the economy, rather than as a source of sustained upward pressure on inflation," said Sal Guatieri, senior economist at BMO Capital Markets, in a note.